In early September of this year,
Webmoney Transfer was kind enough to host me for a three day visit to their
Moscow operation. During this visit I met with management, toured their offices,
worked with their software and even had a sneak peak at some at some of their
partner's high tech hardware. I was very impressed with their business.

Around the world there are some brilliant people creating online payment
products for tomorrow's consumer. These Internet visionaries analyze the
everyday financial issues we all face then create convenient solutions which
make our world run smoother. Webmoney Transfer in Moscow, Russia engages a small
army of these bright young minds.

Webmoney Transfer is a family of products created by knowledgeable
professionals with backgrounds in the daily business practices of Russian
consumers. The operation and the regulatory framework for this dynasty started
in Russia and are based on the changing Russian economic model. When the company
first began operations in 1998, the Internet was brand new, cell phones were
very expensive & the "Internet payments" industry was still in diapers. The
April '98 Time Magazine cover story was asking, "The Future of Money...are banks
really necessary?"

Although during the past decade Webmoney has been rapidly expanding around
the world, a large segment of their products and services still cater to local
Russian consumers and a majority of their customers reside in that part of the
world.

If you have never been to Russia it is impossible to comprehend the many non
bank local payment solutions offered by Webmoney. The company's software
provides a wide variety of solutions that seem permanently integrated into
everyday Russian life.

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Over the past 5-10 years, detailed information about the Webmoney business,
for any English speaking person, has been somewhat limited. It was very
enlightening to visit Moscow and see the system from a local point of view. As a
non Russian person, if you tour their English language web site
http://www.wmtransfer.com the
information you learn online is only a small slice of the total company's
operation.

For permitting such unrestricted access to their company and employees I
would like to send a special thanks to Peter Darakhvelidze and Jane (double
thanks to Jane for translating:-)

Computing Forces

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Mid 1998, there was a group of Russian software engineers creating a new
online banking package. This software would have been marketed to Russian banks,
however, in August of 1998, Russian banking business experienced a major
financial meltdown (also called "Ruble crisis" or "Default"). This event was
essentially a total collapse of their banking industry.

Wikipedia describes the Russian bank situation like this:

The inability of the Russian government to implement a coherent set of
economic reforms led to a severe erosion in investor confidence and a
chain-reaction that can be likened to a run on the Central Bank. Investors
fled the market by selling rubles and Russian assets (such as securities),
which also put downward pressure on the ruble. On August 13, 1998, the
Russian stock, bond, and currency markets collapsed as a result of investor
fears that the government would devalue the ruble, default on domestic debt,
or both. On August 17, 1998, the Russian government and the Central Bank of
Russia issued a "Joint Statement" announcing, in substance, that: (i) the
ruble/dollar trading band would be widened from 5.3-7.1 RUR/USD to 6.0-9.5
RUR/USD; (ii) Russia's ruble-denominated debt would be restructured in a
manner to be announced at a later date; and, to prevent mass Russian bank
default, (iii) a temporary 90-day moratorium would be imposed on the payment
of some bank obligations, including certain debts and forward currency
contracts. Russian inflation in 1998 reached 84 percent and welfare costs
grew considerably. Many banks, including Inkombank, Oneximbank and Tokobank,
were closed down as a result of the crisis....millions of people lost their
bank savings.

The Russian crisis also had a negative effect on the surrounding countries
including but not limited to Estonia, Latvia, Lithuania, Georgia, Belarus,
Kazakhstan, Moldova, Ukraine & Uzbekistan. After August, the engineers' original
online banking software was no longer needed by the banks. Additionally, local
consumers across Russia and the region quickly stopped using the local banks.
Russian banks were not considered safe and as millions of Russian consumers had just lost their savings a new cash driven society
was created almost overnight. Non bank payment options were now in big demand.

WebMoney Transfer Is Born

The banking crisis had created a large receptive market for online payment
services. In late 1998 the Webmoney Transfer software was created from this
original online banking package. The new system permitted consumer payments
without the need for a bank account.

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At that time there were very large differences between regulated online
banking and non bank Internet electronic money.

-Much lower fees
-Less regulation from the state
-Smaller more receptive operators able to quickly adapt their business practices
-Easy entry for new businesses
-Real advantages for local private businesses using these new consumer products and technology.

Since their first day of operation Webmoney has been the front runner in the industry and today still
occupies this top position.

I publish an online magazine focused on alternative currency. Email him with any thoughts or criticism. Note: This online publication represents Carl's personal views. OpEdNews only publishes a portion of Carl's writings.